Web services can help put squeeze on costs

Don't fight reality. While purveyors of Web services paint a picture in which companies generate new revenue by connecting with new customers, fresh research from Jupiter Media Metrix Inc. debunks that scenario.

Jupiter claims that just 16 percent of companies surveyed would use Web services technology to collaborate with new business partners next year.

Instead, 60 percent said they would use Web services technology for enterprise application integration (EAI), and 53 percent said they would use it to integrate their applications with those of their partners and customers.

In other words, companies will use Web services to cut costs rather than prospect for new marketplaces.

"Web services is not about a new business model," says David Schatsky, Jupiter's research director. "It is about saving money on integration, on both sides of the firewall."

The reasons Web services can make this happen are the general availability of the Internet and industry adoption of Web services standards.

A good place to begin using Web services for EAI behind the firewall is CRM , which still has a captive audience. Executives are receptive to integration efforts that give them a more holistic view of customer behavior and requirements. They're willing to spend money to get this information. And the cost of getting their feet wet with Web services isn't high.

Many tools and products take advantage of Web services standards, and most application service vendors are rolling out Web services-enabled versions of their products. In addition, there are freeware products, such as open-source directories for UDDI, a Web services standard.

The adoption of Web services will also cut IT training costs and reduce the price for services EAI vendors provide. Development costs will also be lower because it will be possible to use the same technology for internal and external integration. More cost reductions are possible because it will be easier for companies to assemble best-of-breed components rather than purchase an applications suite from one vendor.

With Web services architecture and integration, you can use components from a variety of vendors. Yes, managing multiple vendors could cost money and time, but having more vendors in the mix will mean more choice at lower prices, and the savings will outweigh the costs.

One caveat: Security for Web services isn't satisfactory for industries that must abide by government mandates. But for less-sensitive industries, Web services offer cost savings and integration benefits. That should be enough to tackle without the challenge of adding new customers.

Pimm Fox is Computerworld's West Coast bureau chief. Contact him at pimm_fox@computerworld.com.

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